Peak Resorts: The New ASC?

[steamboat1]

Year round SCUBA diving tours of the lake?

Correction....$52m in EB-5 money is held in escrow = 104 new full time permanent jobs.

That's just what is held in escrow, doesn't say the total EB-5 funds raised.

Yeah OK

Everyone's talking about Jay/Burke but there's a lot of shenanigans going on here too.

I wouldn't touch their stock with a ten foot pole.

 

[machski]

I wonder whether the 11.4 million in operating capital/free cash is pre or post season pass sales to this point.



While it absolutely is terrible for anyone who was laid off, I'm not horribly worried yet. This should hopefully be a solid summer in terms of season pass sales generating revenue and I'm assuming that Peaks does not lose any money from their summer operations.

As long as they have enough free cash to go into next season and make snow and get every resort up and running, then we shouldn't have any issue. The issue will come if next season is as abysmal as this season. Though if next year is a banner year or even a slightly above average year for snowfall, Peaks is looking to be in great shape.

Right now it appears to be just a mix of the Hunter acquisition adding debt during what turned out be an absolutely devastating financial winter season. The EB-5 funds being frozen isn't connected to the current Peaks financial woes as far as I know.

I don't really see it that way. Their season pass pricing is well below the top pricing at their largest resorts last year so they have to sell that many more to make the same revenue as last year. Maybe they do that, but that is issue one. (And yes, they may get more ancillary revenue from F&B, retail sales or they may not as they attract bargain hunters with the pass pricing).

The other issue is the increased debt load with Hunter on the tails of a horrendous season. This reminds me of ASC when they took on Steamboat and Heavenly after Canyons and hit an awful season in the Rockies and East. Same thing happened, starting a downward spiral they never recovered from.

Yes Peaks is not huge into real estate, but they are a highly leveraged ski company with their largest assets concentrated in the Northeast. Personally, that doesn't feel like a great business model to me.

 

[drjeff]

How does a new 120m gallon reservoir for snowmaking funded with $30m EB-5 money create 60 new full time permanent jobs?

It's not jobs that Mount Snow/Peak Resorts themselves will 100% create in the area, it's also jobs that certain forumula's/statistics show should be created in the general area as a result of the EB-5 money - the full amount now (just over 50 million in escrow waiting for the INS to approve the VISA's (almost all from Chinese investors as I understand) will be for not just the snowmaking expansion (which should bring more people to the mountain, people who will likely need more services both on/off the hill and as such in theory will require businesses to hire more people to take care of the greater number of customers) but also redevelopment of the Carinthia base lodge and surrounding area with a mix of residential and commercial development, which in theory will generate more jobs......

In theory the potential jobs created from the EB-5 money are there on paper..... Will I necessarily being seeing 100+ full time jobs in the area in a few years when me and my family are up in the region in say Late April/early May or Mid October through Thanksgiving?? I'm not so sure..... Will there be increased hiring of staff for multiple local businesses in the winter and likely to some degree summer seasons from the finished development from the EB-5 money? That I think is more realistic

 

[drjeff]

Correction....$52m in EB-5 money is held in escrow = 104 new full time permanent jobs.

That's just what is held in escrow, doesn't say the total EB-5 funds raised.

Yeah OK

Everyone's talking about Jay/Burke but there's a lot of shenanigans going on here too.

I wouldn't touch their stock with a ten foot pole.

The 52 million in escrow now is all slated for "phase I" of their master redevelopment plan

As of the Mount Snow passholders meeting in late February, they said that the main, formal push to raise roughly another 50 million in EB-5 money for "phase II" of redevelopment hasn't heavily commenced yet, but they were planning on doing so relatively soon

Might there be some EB-5 money above and beyond the initial 52 million raised from work done to raise the phase I funds? I suppose, but do not know

 

[Newpylong]

I can confirm that the layoffs. There is a very negative vibe among the remaining employees.


Sent from my iPhone using AlpineZone mobile app

Most people should have assumed no one was safe going into the off season after this year... Not a good feeling indeed.

 

[yeggous]

Most people should have assumed no one was safe going into the off season after this year... Not a good feeling indeed.

I think a lot of employees expected an early end to the season for hourly employees, and probably some furloughs. The thing that caught a lot of them off guard was the layoffs of full-time, permanent employees. I heard *all* of the AttiCat marketing people were laid off. And the remaining Peak Resorts marketing director is on a "vacation" right now.

 

[deadheadskier]

It's not jobs that Mount Snow/Peak Resorts themselves will 100% create in the area, it's also jobs that certain forumula's/statistics show should be created in the general area as a result of the EB-5 money - the full amount now (just over 50 million in escrow waiting for the INS to approve the VISA's (almost all from Chinese investors as I understand) will be for not just the snowmaking expansion (which should bring more people to the mountain, people who will likely need more services both on/off the hill and as such in theory will require businesses to hire more people to take care of the greater number of customers) but also redevelopment of the Carinthia base lodge and surrounding area with a mix of residential and commercial development, which in theory will generate more jobs......

In theory the potential jobs created from the EB-5 money are there on paper..... Will I necessarily being seeing 100+ full time jobs in the area in a few years when me and my family are up in the region in say Late April/early May or Mid October through Thanksgiving?? I'm not so sure..... Will there be increased hiring of staff for multiple local businesses in the winter and likely to some degree summer seasons from the finished development from the EB-5 money? That I think is more realistic

Really? I've never seen language that ancillary jobs are calculated in the equation. If so, then those businesses should receive some of the funds, not just Mount Snow.

I think Jay and Burke both prove out that whatever metric they're using to determine job creation is a complete and utter joke. It will be no different at Mount Snow.

 

[drjeff]

I think a lot of employees expected an early end to the season for hourly employees, and probably some furloughs. The thing that caught a lot of them off guard was the layoffs of full-time, permanent employees. I heard *all* of the AttiCat marketing people were laid off. And the remaining Peak Resorts marketing director is on a "vacation" right now.

FYI, the Peaks marketing guy who is on vacation right now, with a bunch of other Peak full time guys (including one of the CEO's son's) historically has always gone on vacation this time of year to the same basic resort to go golfing, with most of the same Peak guys, for the last 5 or 6 years...

As for the Atti-cat marketing person, Peak, when they brought the person back from his prior GM job in Ohio to handle the regional marketing made the decision to focus their marketing on more of a regional level instead of a resort by resort level. With their marketing guy living in the North Conway area, there was some redundancy is what I'm guessing......

 

[Jully]

I don't really see it that way. Their season pass pricing is well below the top pricing at their largest resorts last year so they have to sell that many more to make the same revenue as last year. Maybe they do that, but that is issue one. (And yes, they may get more ancillary revenue from F&B, retail sales or they may not as they attract bargain hunters with the pass pricing).

Yes Peaks is not huge into real estate, but they are a highly leveraged ski company with their largest assets concentrated in the Northeast. Personally, that doesn't feel like a great business model to me.

Yes they need more volume, but its also about generating operating capital for the next season. Paying employees, inspecting lifts, starting up snowmaking. I think the majority of a resort's income (or at least a plurality of their income) comes from day ticket sales.

Its definitely not the most sound business model. Though their Midwestern resorts are low cost operations that also provide good capital. I think they'll really be in trouble if they look to try and offload one of their holdings. That would mean they are truly cash strapped. Debt load doesn't scare me all that much for a ski resort, though maybe I'll be proven wrong about that in the next few years. Resorts always have debt, Peaks might not be in a favorable debt position right now, but they're not in a devastating position in my opinion.

 

[drjeff]

Really? I've never seen language that ancillary jobs are calculated in the equation. If so, then those businesses should receive some of the funds, not just Mount Snow.

I think Jay and Burke both prove out that whatever metric they're using to determine job creation is a complete and utter joke. It will be no different at Mount Snow.

I remember hearing about the ancillary job creation, at least for a percentage of the job creation, at some presentation about it a year or 2 ago.

Frankly right now in the general Mount Snow area, with the major work going on 2 miles down the street at the Hermitage Club as well. Creating 104 "full time" jobs in the area might actually be quite doable with ancillary creation factors. I can attest, just on the construction side of things, from what my own family went through trying to find a contractor and sub contractors to remodel both of the bathrooms in our condo, a process that started with trying to find a contractor 2 years ago, and finally finished up about a month ago after we gave up trying to find a local contractor up there who would actually take our job and had a GC from our home area in CT head up to do the work, and then had to get VT licensed electricians and plumbers for building code reasons, we couldn't find anyone within 30 miles, because they're all locked into larger new construction projects affiliated with either The Hermitage Club and/or 4 or 5 larger sized townhouse developments, the reality is, even before Mount Snow starts any of the proposed commercial and residential development that probably close to half of those "created jobs" could come from the construction industry. Add in likely a few more realtors and your well on your way to "theoretically" creating all of those jobs as a results of ancillary benefits from the development using the EB-5 funds.....

The Hermitage factor is potentially a BIG help in the ancillary creation in the region, which is something quite different that the Jay/Q-Burke situation.....

 

[Tin]

You will never need Viagra. Just think of Peak Resorts.

 

[drjeff]

Really? I've never seen language that ancillary jobs are calculated in the equation. If so, then those businesses should receive some of the funds, not just Mount Snow.

I think Jay and Burke both prove out that whatever metric they're using to determine job creation is a complete and utter joke. It will be no different at Mount Snow.

Direct v. Indirect Jobs
ƒDirect jobsare actual identifiable jobs for qualified employees located within the commercial enterprise into which the EB-5 investor has directly invested his or her capital.
ƒIndirect jobsare those jobs shown to have been created collaterally or as a result of capital invested in a commercial enterprise affiliated with a regional center by an EB-5 investor.
ƒThe number of indirect jobs created through an EB-5 investor’s capital investment is based upon a business plan and a detailed economic analysis, which is evaluated and approved by USCIS during the approval and designation of a regional center for participation the Immigrant Investor Pilot Program.


That's the direct text from the US Citizens and Immigration Services website about EB-% job creation jobs. Not sure if there is or isn't a set ratio of direct to indirect jobs for the Mount Snow EB-5 proposal or not...

 

[BenedictGomez]

I think Jay and Burke both prove out that whatever metric they're using to determine job creation is a complete and utter joke. It will be no different at Mount Snow.

Exactly; or any other EB-5 project or "jobs created" metric involving the government. It would make your blood boil if you knew the details (SEE: Economic Stimulus Act of 2008 ), but fortunately for the American psyche, few people do.

The number of indirect jobs created through an EB-5 investor’s capital investment is based upon a business plan and a detailed economic analysis, which is evaluated and approved by USCIS during the approval and designation of a regional center for participation the Immigrant Investor Pilot Program.

Bwahahahahahah!!!!!

 

[steamboat1]

How does a $30m reservoir generate cash to pay back EB-5 investors?

 

[thebigo]

I wonder whether the 11.4 million in operating capital/free cash is pre or post season pass sales to this point.

I would imagine the vast majority of people opted for the payment plan, there was no incentive to pay it off up front. For our family any small incentive would have gotten us to pay in full, I suspect the same is true for many. One free ticket next year per pass if you pay in full?

 

[yeggous]

I would imagine the vast majority of people opted for the payment plan, there was no incentive to pay it off up front. For our family any small incentive would have gotten us to pay in full, I suspect the same is true for many. One free ticket next year per pass if you pay in full?

We paid up front. There was a very strong incentive. Pay up front and you can pay with gift cards. That saved me $120 per pass, bringing the Explorer down to $480.

 

[drjeff]

How does a $30m reservoir generate cash to pay back EB-5 investors?

More reliable snowmaking and early season terrain coverage potential (they'll be able to pump twice as much water as they currently can and as such can make snow on a much more terrain at the same time as they can now when the weather cooperates) followed by a planned expansion from the current roughly 80% coverage up to 100% coverage in the few years post the reservoirs and accompanying snowmaking system reconfiguration coming online, which in theory should help increase skier/rider visits and make the property and company more profitable

 

[yeggous]

More reliable snowmaking and early season terrain coverage potential (they'll be able to pump twice as much water as they currently can and as such can make snow on a much more terrain at the same time as they can now when the weather cooperates) followed by a planned expansion from the current roughly 80% coverage up to 100% coverage in the few years post the reservoirs and accompanying snowmaking system reconfiguration coming online, which in theory should help increase skier/rider visits and make the property and company more profitable

I don't get this. Don't they already have serious lift capacity issues? You're talking about a big increase in skier visits.

 

[Newpylong]

Mount Snow does not have lift capacity issues. There are 3 high speed lifts out of the main base. North Face has dual triples.

What they do have is downhill capacity issues which is why expanding the snowmaking is crucial for them. At 70% coverage they are behind the other big players in S VT.

Not for or against EB-5 just providing some info on the mountain as I see it.

 

[drjeff]

I don't get this. Don't they already have serious lift capacity issues? You're talking about a big increase in skier visits.

Yes and no.

They have plenty of lift capacity, even on the most crowded of days, once you get away from the base areas, rarely is there much of a line on the other lifts. What handicaps them now, and this is a significant part of what the West Lake project will help with, is while to posted current snowmaking coverage percentage is listed at just over 80% in reality it's more like 66%, so that leaves a large amount (almost 150 acres) of terrain that can't be dependably covered in low snow years to help spread the crowds out and use that already existing excess lift capacity.

Furthermore, with the ability to pump twice as much water as they can now, in a "normal" weather year, they would anticipate being close to, if not at 100% open by the all important Christmas week once the snowmaking terrain expansion is completed within a few years of West Lake coming online.

More people - that's the hope, but there *should* be more acres of dependable snow if mother nature is cooperative to spread the extra people out over, and then there is also talk of some lift upgrades from fixed grip to highspeed , especially in the greatly underutilized Sunbrook area of the mountain once the snowmaking is increased to 100 percent back there. That will definitely help spread the crowds out as right now very few people, because of the slow, often cold lift ride actually makes laps back there, and the hope is to change that